DIPPED PRODUCTS PLC / ANNUAL REPORT 2008—2009

Accounting Policies
3.1.2 Associates (Equity accounted investees)
Associates are those entities in which the Group has significant influence, but not control, over financial
and operating policies. Significant influence is presumed to exist when the Group holds between 20 to 50
percent of voting power of another entity. Associates are accounted for using the equity method (equity
accounted investees) and are recognized initially at cost. The Consolidated Financial Statements include the
Group’s share of the income and expenses and equity movements of equity accounted investees, from the
date that significant influence commences until the date that significant influence ceases. When the Group’s
share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest is
reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has
incurred obligations or has made payments on behalf of the investee.
3.1.3 Transactions eliminated on Consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the Consolidated Financial Statements. Unrealised gains arising from
transactions with equity accounted investees are eliminated against the investment to the extent of the
Group’s interest in the investee.
Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no
evidence of impairment.
3.2. Foreign currency
3.2.1 Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities
at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated to the functional currency at the exchange rate ruling at
that date. Foreign currency differences arising on translation are recognised in profit & loss.
3.2.2 Financial Statements of foreign entities
The results and financial position of all Group entities that have a functional currency other than Sri Lankan
Rupees are translated into Sri Lankan Rupees as follows:
assets and liabilities for each balance sheet presented, including goodwill and fair value adjustments arising on
the acquisition of a foreign entity, are translated at the closing rate at the date of the balance sheet;
income and expenses are translated at the average exchange rates for the period.
4. Assets and Bases of their Valuation
All resulting exchange differences are recognised in the exchange fluctuation reserve directly in equity.
Assets classified as current assets on the Balance Sheet are cash and bank balances and those which are expected to be
realised in cash during the normal operating cycle or within one year from the Balance Sheet date, whichever is shorter.
4.1 Property, plant & equipment
Items of property, plant and equipment are measured at cost/valuation less accumulated depreciation and
accumulated impairment losses.
4.1.1 Owned assets
The cost of property, plant & equipment includes expenditures that are directly attributable to the
acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour,
any other costs directly attributable to bringing the asset to a working condition for its intended use, and
the costs of dismantling and removing the items and restoring the site on which they are located. Purchased
software that is integral to the functionality of the related equipment is capitalised as a part of that
equipment.
When parts of an item of property, plant & equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant & equipment.
A revaluation of land is done when there is a substantial distinction between the fair value (market value)
and the carrying amount of the asset and is undertaken by professionally qualified valuers.
Increases in the carrying amount on revaluation are credited to the revaluation reserve in shareholders’
equity. Decreases that offset previous increases of the same individual asset are charged against revaluation
reserve directly in equity all other decreases are expensed in profit & loss.
Gains and losses on disposal of property, plant and equipment are determined by comparing the proceeds
from disposal with the carrying amount of property, plant and equipment and are recognised net within
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